OREANDA-NEWS. DIXY Group (RTS, MICEX: DIXY) - one of Russia's leading retailers of foods and everyday products - today announced unaudited IFRS results for the first quarter of 2014.

Key Highlights of the first quarter of 2014:

In the first quarter of 2014, the Company opened 26 stores on net basis. As of March 31, 2014, the Company operated 1,825 stores in Central, North-West and Urals Federal Districts.

Selling Space increased by 19.1% year-on-year to 624,924 sq. m as of March 31, 2014.

Revenue increased by 17.8% (2.5% in USD) year-on-year to RUR 49.9 bln (USD 1.4 bln) in the first quarter of 2014.

Gross Profit grew by 20.9% (5.2% in USD) year-on-year to RUR 15.3 bln (USD 438.9 mln) in the first quarter of 2014.

Gross Margin improved by 80 bp year-on-year to 30.8% in the first quarter of 2014.

EBITDA grew by 22.5% (6.6% in USD) year-on-year to RUR 3.2 bln (USD 92.5 mln) in the first quarter of 2014.

EBITDA Margin increased by 30 bp year-on-year to 6.5% in the first quarter of 2014.

Net Profit grew by 72.7% (50.3% in USD) year-on-year to RUR 667.0 mln (USD 19.1 mln) in the first quarter of 2014.

Net Profit Margin improved by 40 bp year-on-year to 1.3% in the first quarter of 2014.

Operating Cash Flow more than tripled year-on-year to RUR 2.4 bln (USD 69.1 mln) in the first quarter of 2014.

In the first quarter of 2014, the Company opened 26 stores on net basis and increased selling space by 19.1% year-on-year.

The Company continued to work on the efficiency of its processes and productivity of personnel on store level, in logistics and in the back-office.

The Company improved layout of fresh categories, continued to enhance merchandizing and trade marketing, and held ticket driving promotions across DIXY neighborhood chain.

These initiatives, backed by the positive effect from the "perfect store" project implemented in 2013, contributed to 9.5% year-on-year average ticket growth for DIXY neighborhood stores in the first quarter of 2014.

The Company improved centralization level (deliveries through own distribution centers) for its neighborhood stores to 88% in the first quarter of 2014. The logistic service level stood at 91% in the first quarter of 2014.

The back-office processes optimization and legal restructuring program proceeded according to the schedule.

Revenues

Revenue increased by 17.8% (2.5% in USD) year-on-year to RUR 49.9 bln (USD 1.4 bln) in the first quarter of 2014.

DIXY neighborhood stores revenue, which was the main driver of the growth, increased by 20.2% (4.6% in USD) year-on-year to RUR 38.6 bln (USD 1.1 bln) in the first quarter of 2014. Victoria supermarkets revenue grew by 16.4% (1.3% in USD) year-on-year to RUR 5.6 bln (USD 160.7 mln), while the Megamart division revenues increased by 7.0% (decreased by 6.9% in USD) to RUR 3.9 bln (USD 111.4 mln) in the first quarter of 2014.

Gross Profit

Gross Profit grew by 20.9% (5.2% in USD) year-on-year to RUR 15.3 bln (USD 438.9 mln) in the first quarter of 2014. Gross Margin increased by 80 bp year-on-year to 30.8% in the first quarter of 2014, driven by improved commercial terms.

Cost of goods sold, as a percentage of sales, decreased by 110 bp year-on-year to 66.1% of sales in the first quarter of 2014.

Shrinkage costs, as a percentage of sales, increased by 50 bp year-on-year to 2.3% of sales in the first quarter of 2014, due mainly to growing share of fruits and vegetables, as well as other fresh categories, in the DIXY chain sales mix.

Transportation costs, as a percentage of sales, decreased by 10 bp to 0.8% year-on-year in the first quarter of 2014.

Operating Expenses

Selling, General & Administrative Expenses increased by 20.2% (4.5% in USD) year-on-year to RUR 13.5 bln (USD 385.5 mln) in the first quarter of 2014. SGNA expenses, as a percentage of sales, increased by 50 bp year-on-year to 27.0%. The growth was driven mainly by the increase of operating lease, as well as utilities, repair and maintenance expenses, offset partially by reduction of staff expenses, as a percentage of sales, and depreciation and amortization expenses, as a percentage of sales, in the first quarter of 2014.

Staff expenses increased by 14.3% (decreased by 0.6% in USD) year-on-year to RUR 6.6 bln (USD 189.7 mln) in the first quarter of 2014. The increase was due primarily to organic growth of the business and wage indexations, offset partially by headcount reduction and DIXY chain working hours optimization. As a result, staff expenses, as a percentage of sales, decreased by 40 bp 13.3% in the first quarter of 2014 from 13.7% in the first quarter of 2013.

Operating lease expenses grew by 30.5% (13.5% in USD) year-on-year to RUR 3.0 bln (USD 85.5 mln), and, as a percentage of sales, increased by 60 bp year-on-year to 6.0% in the first quarter of 2014, mainly, as a result of growing share of rented space and rent rates inflation, as well as growing share of newly opened stores in Moscow and Moscow Region.

Utilities, repair and maintenance expenses increased by 38.7% (20.7% in USD) year-on-year to RUR 1.3 bln (USD 36.8 mln), and, as a percentage of sales, increased by 40 bp year-on-year to 2.6% of sales in the first quarter of 2014, due mainly to utilities tariffs indexation, as well as the increase of maintenance expenses related to the growth of the business and logistic infrastructure development.

EBITDA grew by 22.5% (6.6% in USD) year-on-year to RUR 3.2 bln (USD 92.5 mln) in the first quarter of 2014. EBITDA Margin increased by 30 bp year-on-year to 6.5% in the first quarter of 2014.

Operating and Net Profits

Depreciation and Amortization expenses increased by 17.6% (2.3% in USD) year-on-year to RUR 1.4 bln (USD 39.2 mln), driven mainly by rapid organic growth of the store chain, as well as logistics infrastructure development. However, D&A expenses, as a percentage of sales, decreased by 10 bp to 2.7% in the first quarter of 2014.

Operating Profit grew by 26.4% (9.9% in USD) year-on-year to RUR 1.9 bln (USD 53.3 mln) in the first quarter of 2014. Operating Margin improved by 20 bp year-on-year to 3.7% in the first quarter of 2014.

Income tax expense decreased year-on-year by 23.4% (33.3% in USD) to RUR 223.0 mln (USD 6.4 mln) in the first quarter of 2014. Effective tax rate decreased to 25.1% for the first quarter of 2014 from 43.0% for the first quarter of 2013. The decrease was due primarily to the corporate restructuring program, and intercompany payments optimization.

Net Profit grew by 72.7% (50.3% in USD) year-on-year to RUR 667.0 mln (USD 19.1 mln) in the first quarter of 2014.

Net Profit Margin improved by 40 bp year-on-year to 1.3% in the first quarter of 2014. Cash Flows and Debt

Net Cash from Operating Activities increased to RUR 2.4 bln (USD 69.1 mln) in the first quarter of 2014 from RUR 726 mln (USD 23.9 mln) in the first quarter of 2013. The increase was due to revenues and profitability growth, helped by efficient working capital management.

As of March 31, 2014, Total Financial Debt to EBITDA ratio stood at 2.1, and Total Financial Debt amounted to RUR 28.7 bln (USD 821.0 mln), while Net Debt amounted to RUR 22.9 bln (USD 641.7 mln) as of March 31, 2014.